Founder Salaries and Stock Vesting - Startups 101

Founder Salaries and Stock Vesting - Startups 101

(00:00:00) Founders, Stock Vesting, and Salaries in Startups

  • Setting clear founder agreements on equity and salary is critical in startups.
  • The storyteller faced hardships due to lack of salary definition, accumulating significant credit card debt.
  • Equitable stock distribution is advised unless additional value (e.g., traction, funding) by one founder justifies imbalance.
  • Vesting agreements protect remaining founders if one leaves early, usually with a 12-month cliff and 4-year vesting term.
  • The importance of filing an 83(b) election in the US is highlighted to avoid tax complications.

Salary Agreements and Founder Dedication

  • Salary agreements define compensation to accommodate founders' varying personal circumstances.
  • In the case of no initial funding, founders might still have side jobs or projects.
  • At Slidebean, founders started with equal salaries, adjusted cash flow priorities accordingly, and treated consulting projects as company revenue.
  • Setting a cap on the time founders can go without a salary and establishing the salary's priority in cash flow is important.
  • Drafting, signing, and committing to a written agreement, even if not legally vetted, is recommended.

Practical Tips and Personal Experiences

  • Salaries should be based on realistic company affordability and may be adjusted for cost of living differences.
  • Founders' personal funds should be treated as investments, with fair stock compensation, rather than covering unequal salaries.
  • Openness in founder relationships is essential to navigate changes, such as the storyteller becoming a father shortly after starting a business.
  • Viewers are encouraged to share their experiences with founder equity distribution for community learning.

Support for the Content and Platform Promotion

  • The creator appreciates feedback and shared experiences.
  • The video production is costly and time-intensive, with requests to share the content and try out the AI-presentation platform.

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